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Security-minded investors scoop up Barracuda's IPO

SEATTLE – Cybersecurity and data storage company Barracuda Networks this morning (Wednesday) raised $75 million, at an opening price of $18 per share, making its public debut on the New York Stock Exchange.

Firewall and data storage company Barracuda Networks made its public debut this morning on the New York Stock Exchange, raising $74 million, at an opening price of $18 per share.

Investors immediately pushed the stock — trading under the ticker symbol CUDA — to more than $23 per share, though the price settled to $21.55 as the market closed.

The 10-year-old company's IPO follows network security company FireEye's sizzling IPO in late September. It's the latest affirmation of Wall Street's continuing love affair with technologies designed to help the good guys slow down data thieves, cyberspies and hacktivists.

"It was very exciting to get to ring the opening bell and see our stock trade for the first time," Barracuda CEO William "BJ" Jenkins told CyberTruth. "A lot of partners and customers want to deal with companies they view as likely to be around for a long time. We've reached a maturity level to where we felt it was a good time to make the private to public leap."

Barracuda provides firewalls, data storage and security systems, much of it through the Internet cloud, to more than 150,000 small and midsize businesses in more than 100 countries.

For its fiscal year ended Feb. 28, Barracuda reported a loss of $9.2 million on revenue of $198.9 million; that followed a year in which it reported a profit of $466,000 on revenue of $160.9 million.

Barracuda has adopted Nordstrom's customer-service approach, while catering to companies of 100 to 5,000 employees. Tech buyers get pampered the way Nordstrom treats shoe shoppers. In the tech space, that's a disruptive way to do business, says Jenkins, a former EMC senior executive.

Barracuda charges a flat fee, rather than a per-user fee, supports a 30-day full refund policy, and staffs customer service phone lines with live experts. "We take risks away, and then we support our customers like no other company out there," Jenkins says. "Our renewal rate for subscription was 96%, on a dollars basis, in the first half of this year."

Those are the kinds of metrics that entice growth-oriented investors, who have no trouble looking past red ink. Wall Street has shown an eagerness to pump up the market value of companies such as Barracuda and FireEye with strong growth prospects and loyal customers, says Venky Ganesan, a managing director at Menlo Ventures.

"What Barracuda does really well is package a bunch of features and deliver it in a digestible format for small and medium-sized companies," Ganesan says. "They're less about being at the cutting edge, and more about packaging all of this technology in a nice easy way, and they've built a really interesting business."

FireEye, which went public at $20 a share six weeks ago, closed Wednesday at $39.89.

"The market currently is interested in getting what's called pure-play security exposure," says Ganesan. "The number of pure-play security options are limited, and all of them are trading well."